Daily Chartbook #236

Welcome back to Daily Chartbook: the day’s best charts & insights, curated.

1. Home prices. "The median U.S. home-sale price rose 1.5% from a year earlier during the four weeks ending July 9, the first increase in nearly five months."

2. Affordability (or lack thereof). "A homebuyer on a $3,000 monthly budget can afford a $450,000 home with today’s average rate. That buyer has lost $30,000 in purchasing power since February, when they could have bought a $480,000 home with that month’s average rate of around 6%."

3. Debt payments. "The chart below shows the average probability of not being able to make minimum debt payments over the next three months for people earning more than $100,000. The bottom line is that higher-income households are starting to worry about their finances."

4. Card spending. "Total card spending was up 2.2% y/y in the week ending July 8, when spending would have been impacted by the July 4 holiday. Notably, y/y spending growth increased in every major category relative to the week ending July 1."

5. Office demand. "Leasing rebounded 7.7% in the second quarter from the first three months of the year... [but] was down 14% from the same period a year ago and below a pre-pandemic average."

6. Beige Book. "Concern about inflation is abating, as are worries about wages, while talk of recession is (thankfully) limited. The chart does suggest that the Fed’s employees are picking up persistent concerns about the availability of credit."

7. PPI (I). Headline and core producer prices each rose by 0.1% in June (vs. +0.2% est).

8. PPI (II). On an annual basis, headline PPI dropped to the lowest (0.1%) since 2020 while core PPI fell to the lowest (2.4%%) since January 2021.

9. PPI vs. CPI. "The spread between y/y CPI and PPI remains at the widest levels since the current incarnation of PPI started in 2011."

10. Misery Index. "Lowest since early 2020."

11. Jobless claims. "Initial jobless claims declined -12,000 last week to 237,000. The four week average declined -6,750 to 246,750. With a one week delay, continuing claims increased 11,000 to 1,729,000."

12. Wage growth. The Atlanta Fed's Wage Growth Tracker fell to 5.6% (lowest since January 2022) in June from 6% in May. Wage growth for job-switchers and job-stayers fell to 6.1% (from 6.8%) and 5.5% (from 5.8%), respectively.

13. Fed vs. inflation. "The Fed funds effective rate trades above core inflation for the first time since 2019, tempting markets to believe we've hit the sufficiently restrictive stance Powell was looking for."

14. Oversold DXY. "The US dollar is in oversold territory for the first time since 2020."

15. HFs vs. USD. "Hedge funds had been bracing for weakness, as they turned net sellers of the dollar for the first time since March."

16. Dollar seasonality. "One other potential reason to hesitate piling into the long side of the U.S. Dollar."

17. CTAs vs. copper/gold. CTAs are short copper and long gold.

18. Stocks vs. bonds. "Optimism in the stock market is 65 points higher than in the bond market. Investors have never (well, in 24 years) had a more disparate view of the two markets."

19. AAII sentiment. "Bull sentiment slightly lower, while bears remain depressed, with small changes compared to last week."

20. Active managers. The NAAIM Exposure Index rose sharply over the last week to 93.3 from 83.1.

21. HFs vs. equities. Macro hedge funds' US equities "exposure has become more closely tied to economic indicators in the year to date, especially in the midst of the recent US banking sector woes."

22. HFs vs. financials. "Hedge fund net exposure [to banks is] the lowest across the 24 industry groups we track and sitting in the 6th %ile, declining by 20% since Q1 and underscoring limited participation in the recent move higher."

23. Single stock skew. "The current earnings season is setting up to be one of the best times to trade in single stock options before earnings in the past 20+ years, in our opinion. Our analysis suggests that calls and puts are more attractive than in over 90% of months over the past 27-years."

24. SPX revisions. "S&P 500 2Q consensus EPS was cut by just 2% since March, half of the typical pre-season 4% cut, with the heftiest downward revisions in Energy and Materials. Expectations now stand at $52.88 (-8% YoY)."

25. Earnings momentum (I). "Earnings forecast reversions are more constructive going into Q2 than they were ahead of prior earnings seasons...ETF flows have been strong – 1m US equity ETF inflows of ~USD45bn are 1.5 s.d. above the 5-year mean."

26. Earnings momentum (II). "The relative earnings momentum of US growth stocks has improved."

27. Small-cap revisions. "Earnings revision trends have improved from the lows in March across the board, but earnings revisions are still below 1.0 (more cuts than raises to estimates) in all three size segments (and weakest in small caps)."

28. Earnings & revenue growth. "Analysts expect earnings growth to accelerate."

29. EPS expected vs. actual. And finally, “in the 9 quarters since the start of 2021 actual S&P YoY EPS growth has beat consensus expectations in 8 of the last 9 quarters (by an avg of ~10% each quarter). S&P 500 firms should be able to exceed the low bar set for 2Q (again).”

Thanks for reading!